State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: July 21, 2016 521710 

________________________________

WELLS FARGO BANK, N.A., as

Trustee for CARRINGTON 

MORTGAGE LOAN TRUST, SERIES 

2006-NC2 ASSET-BACKED 

PASS-THROUGH CERTIFICATES,

Respondent,

v MEMORANDUM AND ORDER

JONATHAN G. WALKER,

Appellant, 

et al., 

Defendant.

________________________________

Calendar Date: May 31, 2016

Before: Lahtinen, J.P., Egan Jr., Lynch, Devine and Mulvey, JJ.

__________

John P. Kingsley, PC, Catskill (John P. Kingsley of

counsel), for appellant.

Peter T. Roach & Associates, PC, Syosset (Michael C.

Manniello of counsel), for respondent.

__________

Lynch, J.

Appeals (1) from an order of the Supreme Court (Melkonian,

J.), entered April 28, 2015 in Ulster County, which, among other

things, granted plaintiff's motion for summary judgment, and (2)

from the judgment entered thereon.

In April 2006, defendant Jonathan G. Walker (hereinafter

defendant) executed a note in favor of New Century Mortgage
-2- 521710 

Corporation (hereinafter NCMC) that was secured by a mortgage on

real property located in Ulster County. In a 2006 pooling and

servicing agreement (hereinafter PSA), plaintiff was named as

trustee of a loan trust and NCMC was designated predecessor in

interest to Carrington Mortgage Services, LLC (hereinafter CMS),

as servicer. After NCMC filed for bankruptcy in 2007, certain

assets were transferred to New Century Liquidating Trust

(hereinafter NCLT). Also, as part of NCMC's bankruptcy, it sold

its mortgage loan servicing business to CMS and named it the

attorney-in-fact relative to the mortgages sold. In 2010, CMS

entered into a loan modification agreement with defendant that

increased the principal balance of the existing mortgage. In May

2012, the mortgage and underlying note were assigned to

plaintiff. Three days later, plaintiff commenced this

foreclosure action. Following joinder of issue, defendant sent a

document demand to plaintiff regarding the note and mortgage,

including a demand for production of the original note. Without

responding, plaintiff moved for summary judgment, which was

granted by Supreme Court (Melkonian, J.). Thereafter, Supreme

Court (Cahill, J.) issued a judgment of foreclosure and sale. 

Defendant now appeals both the order and the judgment.

A plaintiff can establish entitlement to summary judgment

by producing evidence of the mortgage, the unpaid note and the

defendant's default (see Deutsche Bank Natl. Trust Co. v Monica,

131 AD3d 737, 738 [2015]; Wells Fargo Bank, NA v Ostiguy, 127

AD3d 1375, 1376 [2015]). However, where, as here, the defendant

raised the issue of standing in the answer, the "plaintiff bore

the additional burden of demonstrating that, 'at the time the

action was commenced, [it] was the holder or assignee of the

mortgage and the holder or assignee of the underlying note'"

(Bank of N.Y. Mellon v McClintock, 138 AD3d 1372, 1373-1374

[2016], quoting Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d

at 738). "Either a written assignment of the underlying note or

the physical delivery of the note prior to commencement of the

foreclosure action is sufficient to transfer the obligation"

(Chase Home Fin., LLC v Miciotta, 101 AD3d 1307, 1307 [2012],

quoting U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754 [2009]).

"That said, the note[,] and not the mortgage, is the dispositive

instrument that conveys standing to foreclose under New York law"

(Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d at 738; see
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Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361-362 [2015]). 

Notably, as relevant here, the holder of a note is "the person in

possession of a negotiable instrument that is payable either to

bearer or to an identified person that is the person in

possession" (UCC 1-201 [b] [21]; see UCC 1-201 [b] [5]).

Here, plaintiff sought to establish standing by virtue of

the 2012 assignment, coupled with its assertion that it has had

possession of the note since 2006. To that end, plaintiff

produced the affidavit of Elizabeth Ostermann, a vice-president

for CMS, which, as noted, had been appointed attorney-in-fact for

plaintiff in February 2012. As to the issue of possession,

Ostermann avers that plaintiff, as trustee, has been in

continuous possession of the note since the PSA was signed in

June 2006 and "is still in possession of the [n]ote, and can

produce same if the [c]ourt so requires." As CMS was servicer

and attorney-in-fact, Ostermann was entitled to rely on the

transaction records (see Deutsche Bank Natl. Trust Co. v Monica,

131 AD3d at 739). For proof of possession, however, she simply

refers to the PSA, which is not in the record (compare Aurora

Loan Servs., LLC v Taylor, 25 NY3d at 359; Bank of N.Y. Mellon v

McClintock, 138 AD3d at 1374-1375; HSBC Bank USA, N.A. v Sage,

112 AD3d 1126, 1127-1128 [2013], lvs dismissed 23 NY3d 1015

[2014], 22 NY3d 1172 [2014]), and makes no representation as to

having examined the original note (see JP Morgan Chase Bank, N.A.

v Hill, 133 AD3d 1057, 1058 [2015]). Contrary to Supreme Court's

findings, the note is not indorsed and, thus, the court's

conclusion that plaintiff was the holder of the note was in error

(see UCC 1-201 [b] [5] [21]; 3-202). In our view, plaintiff's

proof falls short of establishing standing by physical delivery

of the note.

As to the assignment, Ostermann avers that "[t]he

[m]ortgage was assigned by written agreement on May 14, 2012

. . . from New Century Corporation, to Wells Fargo Bank, N.A., as

Trustee." We recognize that, by its terms, the assignment

conveys the mortgage "together with the bond or note or

obligation described in said mortgage" – language that effects an

assignment of both the note and mortgage. The focus here,

however, is on whether the assignor had authority to actually

assign the note (see Bank of N.Y. v Silverberg, 86 AD3d 274, 281
-4- 521710 

[2011]). Plaintiff has the burden of proof on this issue (see

id.). The assignment identifies the assignor as NCMC, while the

document is executed on behalf of "New Century Liquidating Trust

Successor-In-Interest to New Century Mortgage Corporation By

Carrington Mortgage Services, LLC as Attorney-in-Fact" by

Ostermann as vice-president of foreclosure for CMS. Plaintiff

points to several documents in the record to establish the

underlying authority for this assignment. Specifically, in

November 2008, NCLT, as successor to NCMC, gave CMS a limited

power of attorney to, among other things, execute mortgage

assignments. Previously, NCMC had transferred its servicing

rights to CMS. Significantly, in 2010, CMS and defendant entered

into a "Loan Modification Agreement" restating the principal

balance at $266,277 – a transaction memorializing a continuing

ownership interest in the note held by NCLT as successor to NCMC

and exercised through its agent CMS. Given the foregoing, we

agree that plaintiff established authority for NCLT, as successor

to NCMC, to effectuate the assignment of the note to plaintiff.

That CMS served as power of attorney for both parties to the

assignment does not undermine its validity. As such, we conclude

that Supreme Court properly found that plaintiff had standing to

initiate this foreclosure action (see Aurora Loan Servs., LLC v

Taylor, 25 NY3d at 361-362). We further conclude that plaintiff

duly demonstrated compliance with the 90-day notice requirements

and corresponding filing requirements set forth in RPAPL 1304 and

1306, respectively (see TD Bank, N.A. v Leroy, 121 AD3d 1256,

1257 [2014]).

Lahtinen, J.P., Egan Jr., Devine and Mulvey, JJ., concur.
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ORDERED that the order and judgment are affirmed, with

costs.

ENTER:

Robert D. Mayberger

Clerk of the Court